Summer is winding down, and as we took a break to hike the trails of Montana’s scenic landscapes — family in tow, sun shining, and nature doing its thing — we couldn’t help but be grateful for this incredible community. The photo in this post is a little snapshot from our hike, and it’s a reminder that even in a fast-paced industry like ours, it’s important to hit pause and take in the moments we live for.
Okay, now let’s dive into what’s happening in the commercial real estate market across Montana and Wyoming.
Year-to-date, office leasing is leading the pack, accounting for 26% of commercial transactions, with industrial leases also strong at 16%. The market is tight — properties are typically staying on the market for about six months — but that could be seen as a sign that people are taking their time to make well-considered investments.
As for lending rates, they’re currently ranging between 6.75% and 8.50%, setting a clear boundary for deals with a 9% cap rate or higher. Cap rates themselves are ranging between 7.5% and 12%, offering a diverse field of investment options.
Overall, retail and office spaces are still making waves, especially in busier markets like Billings, Bozeman, Missoula, Cheyenne, and Casper.
Big News on the Tech Front!
We’re jazzed to introduce a new software called Investnext that will make investing easier. You’ll be able to track contributions, returns, and property updates all in one place. Be on the lookout for an invite coming your way this September.
The Million Dollar Question: Are Interest Rates Going to Rise Again?
After a rollercoaster of market fluctuations, we’re all eagerly waiting to see if the Federal Reserve will hike up interest rates. Jerome Powell, the Fed Chair, addressed the nation from the Jackson Hole symposium and provided some clarity on August 25th.
Here’s What You Need to Know:
Powell confirmed that the Fed has been tightening the purse strings to tame inflation, which has dropped from its peak but still hovers higher than they’d like. The message was loud and clear: they’re willing to ramp up rates further if needed.
Powell pinpointed the current inflation trends to two main factors: the unwinding of pandemic-induced demand and supply limitations, and the monetary policies aiming to slow demand. For those keeping track, the headline PCE inflation rate — a primary measure — peaked at 7% in June 2022 but has since declined to 3.3% in July. Core PCE inflation, which excludes volatile food and energy prices, is still sitting at a lofty 4.3%.
What Does This Mean for the Housing Market?
The housing sector felt the ripple effects almost instantly after the initial monetary tightening. Mortgage rates doubled in 2022, causing a drop in housing starts and sales. It looks like rent increases are also slowing down, which could soon be reflected in overall inflation metrics.
So, What’s Next?
Looking ahead, Powell emphasized the role of restrictive monetary policies in pushing inflation back down to the target 2%. We can expect slower economic growth and some softening in labor market conditions to play their part.
Expect careful, data-driven moves from the Fed in the coming months. This could include further rate hikes if the economy doesn’t cool as expected. In short, now’s not the time for complacency. Whether you’re an investor, a homeowner, or someone simply looking to understand the economic landscape — staying informed is your best strategy.
What’s New With Us?
We’ve got a quick video that sheds light on our latest projects. Trust us, you’ll want to watch this. Click here to view the video.
As your partners at Blackarc Investments, we’re committed to keeping you in the loop. Feel free to reach out to our team at any time. Until next month, enjoy the final days of summer, and here’s to another quarter of successful investing.